Inheritance tax bill exceeds £3 billion

The inheritance tax (IHT) paid on 17,900 estates exceeded £3 billion in 2012/13, according to Prudential.

This represents a 15% increase from the £2.65 billion paid in the previous year.

Analysis of HMRC data shows that out of the 280,000 estates reviewed, only 6% paid IHT. However these figures do not represent an increase of estate properties liable for IHT.

The most IHT was paid on estates located in London and the South East of England, with both areas accounting for 50% of all payments in 2012/13. 42% of estates were liable for IHT due to exceeding the £325,000 threshold.

IHT was higher in London than anywhere else in the country. The amount paid per liable estate reached £236,000 – 38% higher than the national average.

From April 2017 individuals will have an allowance of £100,000 in addition to the £325,000 threshold, allowing them to pass on an estate worth up to £425,000 tax-free.

Les Cameron, a tax specialist at Prudential, said:

“As the total amount of IHT paid increases, so does the value of careful tax planning for anyone looking to cascade as much of their wealth to their families as possible.

“Planning for IHT is at its most valuable when it is done early and has become increasingly important with the additional options and complexities brought about by the new rules allowing individuals to pass on pension savings to family members."